Shelly v. Doe
| Decision Date | 28 May 1997 |
| Citation | 173 Misc.2d 200,660 N.Y.S.2d 937 |
| Parties | Robert F. SHELLY et al., Petitioners, v. Susan DOE, an Infant, Respondent. |
| Court | New York County Court |
Nash & Palm, Canton (Charles B. Nash, of counsel), for petitioners.
Robert H. Ballan, Norwood, for respondent.
This is a special proceeding authorized by CPLR 5239 to determine adverse claims to personal property, in the context of a property execution to collect a money judgment. County Court has subject matter jurisdiction of the proceeding under CPLR 5221(a)(4), even though the judgment in question was entered in Supreme Court. The Sheriff has attempted to levy execution on a collection of handguns which were formerly the property of Robert Shelly (hereafter called Robert), and which are now held by William Shelly (hereafter called William), to apply their value toward the $602,443.29 judgment. Petitioners argue that the guns are legitimately William's property by gift from Robert. Respondent argues that the transfer to William was a voidable fraudulent conveyance, on a number of grounds, under Debtor and Creditor Law §§ 270-281, also known as the Uniform Fraudulent Conveyance Act (UFCA).
Through their pleadings the parties agree to the following pertinent facts. Beginning in 1987, Robert began a series of acts of abuse of the respondent, who was then ten years old, and this conduct continued until 1990. In November or December 1993 Robert was arrested on felony charges concerning these acts.
On December 1, 1993 Robert turned over to the State Police a collection of handguns and long guns, and received a receipt for them. On December 7, 1993 these guns were turned over, with Robert's knowledge and consent, to his brother William. Notwithstanding his gift of the guns, Robert remained, and apparently remains, a member of one or more hunting clubs, although the significance of that fact, if any, has not been established.
In the Spring of 1994 Robert entered a guilty plea to the felony charges. On June 17, 1994 respondent commenced a civil action for money damages relating to the criminal acts.
In a May 17, 1995 sworn statement of net worth presumably filed in connection with another proceeding involving Robert, the stated value of his assets at that time, without regard to his then-current liabilities or to property which he claimed to be exempt, was less than the amount of the civil judgment entered on January 21, 1997 after trial. After offsetting the $2,443.29 attributable to costs and disbursements in the judgment, 50% of the recovery was for compensatory and 50% for punitive damages. No appeal has been taken from the judgment or award, and no stay has been sought or issued.
In January 1997 Robert asserted, in response to an information subpoena, that his 1993 transfer of the guns was a gift to William. Robert valued the gift at not more than $2,500.00 in December 1993, and stated that his gift was motivated by legal advice to the effect that his pistol license would be revoked because of then-pending felony charges, and that any felony conviction would bar his right to possess long guns as well.
A restraining notice was served on William in March 1997, to bar any further transfer of the guns, thereby setting up the conflicting claims now raised in this proceeding.
Respondent obtained a 1997 blind estimate from a gun dealer who has not seen the guns in question. That dealer asserts a present value of the collection at $5,750.00, more than twice the 1993 value asserted by Robert. However, the parties do agree that Robert would not have been made insolvent in 1993 solely by reason of the transfer of the guns, even if respondent's higher value were used.
The parties disagree on the answers to five questions which must be resolved through application of the Uniform Fraudulent Conveyance Act:
1. Was respondent a creditor of Robert when he gave the guns to William; and
2. When Robert gave the guns to William, was respondent's cause of action for the abuse torts a debt, within the meaning of the act; and
3. Was Robert insolvent when he gave the guns to William; and
4. Did Robert believe or intend that he would incur debts beyond his ability to pay when he gave the guns to William; and
5. Did Robert have an actual intent to defraud present or future creditors when he gave the guns to William?
These questions are posed in terms of the language of Debtor and Creditor Law (hereinafter abbreviated DCL) §§ 273, 275 and 276 respectively.
The following terms have been statutorily defined, and are relevant to these issues:
• "creditor"--DCL § 270--"a person having any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent."
• "debt"--DCL § 270--"any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent." • "insolvency"--DCL § 271(1)--"A person is insolvent when the present fair salable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured."
• "conveyance by insolvent"--DCL § 273--"Every conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made or the obligation is incurred without a fair consideration."
• "conveyance by person about to incur debts"--DCL § 275--"Every conveyance made and every obligation incurred without fair consideration when the person making the conveyance or entering into the obligation intends or believes that he will incur debts beyond his ability to pay as they mature, is fraudulent as to both present and future creditors."
• "conveyance made with intent to defraud"--DCL § 276--"Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors."
Perusal of DCL §§ 270-281 discloses several groups of provisions: § 270 contains definitions; §§ 273-275 define different aspects of constructive fraud, or fraud presumed in law; § 276 defines actual fraud; § 278 defines the remedies for a claimant whose claim had matured at date of transfer; § 279 provides the remedies for a claimant whose claim was unmatured; § 280 incorporates the law relating to bankruptcy, among other topics, to assist in resolving cases not directly addressed by the Uniform Act; and § 281 expresses a legislative intent that the UFCA be so construed as to make uniform the laws of the states which enact it.
Although the DCL uses the terms "matured," "liquidated" and "contingent" (and their opposites), they are not defined in the statute.
A claim is said to have matured--a term used in the substantively identical definitions of creditor and debt under the DCL--when it "has become absolutely due without contingency, although not necessarily liquidated nor presently payable." Black's Law Dictionary, 4th ed., definition of "mature; matured," p. 1130, citing In Re L.P. Hollander, 301 Mass. 278, 16 N.E.2d 35, 36. Maturity of a debt, then, has to do with whether it is presently due.
A claim is said to be liquidated--another term used in the same definitions--when it is "ascertained; fixed; settled; made clear or manifest." (Black's Law Dictionary, op. cit., at 1079 [].)
A contingent claim is one which "has not accrued and which is dependent on some future event that may never happen." (Black's Law Dictionary, op. cit., at 392 [].)
In December 1993 when Robert gave the guns to William he had completed what were later determined to be criminal acts; he was charged with pending felonies as to which at that point in time he was presumed innocent; and although respondent's right to sue had accrued, the civil suit had not yet been commenced. Respondent's claim at that point in time may therefore be characterized, for purposes of the DCL, as unmatured, because a court had not found it to be due; and unliquidated, because it was neither settled nor fixed as to amount.
New York adopted the Uniform Fraudulent Conveyance Act (henceforth abbreviated UFCA) without change from the text of the uniform model statute. Marine Midland Bank v. Murkoff, 120 A.D.2d 122, 508 N.Y.S.2d 17 (2 Dept.1986), app. dism'd 69 N.Y.2d 875, 514 N.Y.S.2d 1029, 507 N.E.2d 322. It is interesting to note that the UFCA does not define the term "claim," although the more recent Uniform Fraudulent Transfers Act (hereafter abbreviated as UFTA)--adopted by more jurisdictions, but not by New York--does so. In the latter statute a claim is defined as "a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured." Uniform Fraudulent Transfers Act § 1(3). Clearly there is substantial overlap between the two and any distinctions may be without any practical difference. It is noted, however, that "claim" as defined in the UFTA is dependent upon a right to payment. Clearly under the UFCA a debt is dependent on there being a legal liability. The real question in this proceeding is whether a mere cause of action or right of action based upon a completed intentional tort constitutes a debt and makes the victim of that tort a creditor within the meaning of the UFCA. Historical notes and comments to the UFTA state as follows:
"(3) The definition of "claim" is derived from section 101(4) of the Bankruptcy...
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